Magnachip Semiconductor LLC : MagnaChip Reports First Quarter 2012 Financial Results
04/25/2012| 04:05pm US/Eastern
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SEOUL, South Korea and CUPERTINO, Calif., April 25, 2012 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip") (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the first quarter ended March 31, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120305/NY61184LOGO )
Revenue for the first quarter of 2012 was $177.0 million, a 2.1% decrease compared to $180.8 million for the fourth quarter of 2011, and a 5.8% decrease compared to $187.9 million for the first quarter of 2011.
Gross profit was $49.9 million or 28.2%, as a percent of revenue, for the first quarter of 2012. This compares to gross profit of $51.5 million or 28.5 % for the fourth quarter of 2011 and $56.5 million or 30.1% for the first quarter of 2011.
"I am very pleased that since going public in March 2011, we have met our revenue and gross margin guidance each quarter for 5 consecutive quarters in what has been a very challenging period for the industry," said Sang Park, MagnaChip's Chairman and Chief Executive Officer. "As our Q2 guidance suggests, the first quarter of 2012 was indeed our bottom during this current semiconductor downturn. We have been seeing renewed customer order strength and wafer loading since early March as a result of increased demand from smartphone and tablet PC customers and expect this trend to continue into the second half of this year. In anticipation of this growing demand, we have allocated additional fab capacity to support expansion."
Net income, on a GAAP basis, for the first quarter of 2012 totaled $15.3 million or $0.40 per diluted share. This compares to net income of $23.7 million or $0.61 per diluted share for the fourth quarter of 2011 and a net income of $22.5 million or $0.57 per diluted share for the first quarter of 2011. Net income was impacted primarily by a foreign currency gain of $11.1 million during the quarter which was primarily related to non-cash translation gains for intercompany balances that were denominated in U.S. dollars.
Adjusted net income, a non-GAAP measurement, for the first quarter of 2012 totaled $6.5 million or $0.17 per diluted share compared to $10.0 million or $0.26 per diluted share for the fourth quarter of 2011 and $15.7 million or $0.40 per diluted share for the first quarter of 2011.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more meaningful understanding of the factors and trends affecting MagnaChip's business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP.
Combined cash balances (cash and cash equivalents plus restricted cash) totaled $160.6 million at the end of the first quarter of 2012, a decrease of $8.4 million from the end of the prior quarter. Cash provided from operations totaled approximately $39.9 million for the first quarter of 2012.
Revenue by Segment
In thousands of US
dollars Three Months Ended
March 31, 2012 December 31, 2011 March 31, 2011
Semiconductor $67,863 $67,973 $92,266
Manufacturing
Services
Display Solutions 83,225 90,045 74,464
Power Solutions 25,253 22,039 20,412
Other 661 769 779
Total Revenue $177,002 $180,826 $187,921
First Quarter and Recent Company Highlights
-- Power Solutions Revenue Grew 14.6% Sequentially and 23.7%
Year-over-Year.
-- Fab loading rate exceeded 90% in March 2012.
-- Achieved GAAP EPS of $0.40 and Adjusted EPS of $0.17.
-- Repurchased 1.04 Million Shares under MagnaChip's Stock Repurchase
Program Announced October 11, 2011.
Business Outlook
For the second quarter of 2012, MagnaChip expects:
-- Revenue will increase 11% to 15% ($197 million to $203 million) on a
sequential basis.
-- Gross Profit, as a percent of revenue, will be in the range of 29.5% to
30.5%.
Non-GAAP Metrics
Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, net, income tax expense, stock-based compensation expense, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. Adjusted net income (loss) excludes charges related to, stock-based compensation expense, amortization of intangible assets associated with continuing operations, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.
About MagnaChip Semiconductor Corporation
Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through, MagnaChip's website is not a part of, and is not incorporated into, this release.
Safe Harbor for Forward-Looking Statements
Information in this release regarding MagnaChip's forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our ability to capitalize on improving market dynamics and future operating and financial performance including second quarter 2012 revenue and gross profit. All forward-looking statements included in this release are based upon information available to MagnaChip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip's filings with the SEC, including our Form 10-K filed on March 8, 2012 and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.
CONTACTS:
In Korea:
In the United States: Chankeun Park
Robert Pursel Senior Manager, Public Relations
Director of Investor Relations Tel. +82-2-6903-3195
Tel. 408-625-1262 chankeun.park@magnachip.com
robert.pursel@magnachip.com
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except share data)
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2012 2011 2011
---- ---- ----
Net sales $177,002 $180,826 $187,921
Cost of sales 127,087 129,287 131,447
------- ------- -------
Gross profit 49,915 51,539 56,474
------ ------ ------
Gross profit % 28.2% 28.5% 30.1%
Selling, general and administrative expenses 18,209 17,627 15,401
Research and development expenses 19,831 18,652 18,498
Special expense for IPO incentive - - 12,146
Operating income 11,875 15,260 10,429
Other income (expense)
Interest expense, net (5,580) (5,644) (7,111)
Foreign currency gain, net 11,109 16,832 21,359
Other 89 (862) 166
--- ---- ---
5,618 10,326 14,414
----- ------ ------
Income before income taxes 17,493 25,586 24,843
------ ------ ------
Income tax expense 2,230 1,881 2,375
----- ----- -----
Net income $15,263 $23,705 $22,468
======= ======= =======
Earnings per common share :
- Basic $0.41 $0.61 $0.59
- Diluted $0.40 $0.61 $0.57
===== ===== =====
Weighted average number of shares-Basic 37,524,127 38,632,975 38,332,750
Weighted average number of shares-Diluted 38,298,336 39,110,759 39,570,522
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NETINCOME
(In thousands of US dollars, except share data)
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2012 2011 2011
Net income $15,263 $23,705 $22,468
Adjustments:
Depreciation and amortization 7,474 8,856 13,903
Interest expense, net 5,580 5,644 7,111
Income tax expense 2,230 1,881 2,375
Stock-based compensation
expense 458 287 641
Foreign currency gain, net (11,109) (16,832) (21,359)
Derivative valuation loss
(gain), net (85) 862 (158)
Special expense for IPO
incentive - - 12,146
Adjusted EBITDA $19,811 $24,403 $37,127
======= ======= =======
Adjusted EBITDA per common
share:
- Diluted $0.52 $0.62 $0.94
Weighted average number of
shares -Diluted 38,298,336 39,110,759 39,570,522
Net income $15,263 $23,705 $22,468
Adjustments:
Stock-based compensation
expense 458 287 641
Amortization of intangibles 1,993 1,985 1,990
Foreign currency gain, net (11,109) (16,832) (21,359)
Derivative valuation loss
(gain), net (85) 862 (158)
Special expense for IPO
incentive - - 12,146
--- --- ------
Adjusted net income $6,520 $10,007 $15,728
====== ======= =======
Adjusted net income per common
share:
- Diluted $0.17 $0.26 $0.40
Weighted average number of
shares -Diluted 38,298,336 39,110,759 39,570,522
We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense, (iv) stock-based compensation expense, (v) foreign currency gain, net, (vi) derivative valuation loss (gain), net, and (vii) special expense for IPO incentive.
We present Adjusted Net Income as a further supplemental measure of our performance. We prepare Adjusted Net Income by adjusting net income to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income as net income adjusted to exclude (i) stock-based compensation expense, (ii) amortization of intangibles, (iii) foreign currency gain, net, (iv) derivative valuation loss (gain), net, and (v) special expense for IPO incentive.
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except share data)
(Unaudited)
March 31, December 31,
2012 2011
---- ----
Assets
Current assets
Cash and cash equivalents $156,623 $162,111
Restricted cash 3,934 6,830
Accounts receivable, net 127,332 125,922
Inventories, net 68,105 62,836
Other receivables 4,343 256
Prepaid expenses 8,112 6,032
Other current assets 5,578 15,909
----- ------
Total current assets 374,027 379,896
------- -------
Property, plant and equipment, net 206,206 182,663
Intangible assets, net 20,348 16,787
Long-term prepaid expenses 4,107 4,790
Other non-current assets 17,972 18,539
------ ------
Total assets $622,660 $602,675
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $90,902 $77,848
Other accounts payable 13,772 13,452
Accrued expenses 39,649 31,723
Current portion of capital lease obligations 1,458 2,852
Derivative liabilities 8,308 9,757
Other current liabilities 3,266 2,007
----- -----
Total current liabilities 157,355 137,639
Long-term borrowings, net 201,452 201,389
Accrued severance benefits, net 94,352 90,755
Other non-current liabilities 5,596 6,222
----- -----
Total liabilities 458,755 436,005
------- -------
Commitments and contingencies
Stockholder' equity
Common stock, $0.01 par value, 150,000,000
shares authorized, 39,457,063 394 394
shares issued and 36,880,879 outstanding at
March 31, 2012 and 39,439,115
shares issued and 37,907,575 outstanding at
December 31, 2011
Additional paid-in capital 99,495 98,929
Retained earnings 109,213 93,950
Treasury stock, 2,576,184 shares at March 31,
2012 (23,728) (11,793)
Accumulated other comprehensive loss (21,469) (14,810)
------- -------
Total stockholders' equity 163,905 166,670
======= =======
Total liabilities and stockholders' equity $622,660 $602,675
======== ========
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(Unaudited)
Three MonthsEnded
-----------------
March 31, March 31,
2012 2011
---- ----
Cash flows from operating activities
Net income $15,263 $22,468
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 7,474 13,903
Provision for severance benefits 4,703 2,854
Amortization of debt issuance costs and original issue discount 242 246
Gain on foreign currency translation, net (12,824) (23,684)
Gain on disposal of property, plant and equipment, net (269) -
Loss on disposal of intangible assets, net 11 4
Stock-based compensation 458 641
Other 123 549
Changes in operating assets and liabilities
Accounts receivable 1,339 (9,250)
Inventories (2,860) (3,467)
Other receivables (4,024) (1,041)
Other current assets 8,536 (1,449)
Deferred tax assets 871 548
Accounts payable 12,581 14,289
Other accounts payable (298) (1,348)
Accrued expenses 9,886 7,153
Other current liabilities 2,225 (1,518)
Payment of severance benefits (2,323) (1,610)
Other (1,261) (72)
------ ---
Net cash provided by operating activities 39,853 19,216
------ ------
Cash flows from investing activities
Decrease in restricted cash 2,995 -
Proceeds from disposal of plant, property and equipment 273 -
Purchase of plant, property and equipment (24,758) (6,779)
Payment for intellectual property registration (190) (165)
Payment for acquisition (8,642) -
Decrease in short-term financial instruments 173 -
Collection of guarantee deposits 31 979
Payment of guarantee deposits (178) (1,004)
Other (48) (44)
--- ---
Net cash used in investing activities (30,344) (7,013)
------- ------
Cash flows from financing activities
Proceeds from issuance of common stock 108 11,425
Repayment of obligation under capital lease (1,510) (1,562)
Acquisition of treasury stock (11,935) -
Net cash provided by (used in) financing activities (13,337) 9,863
Effect of exchange rates on cash and cash equivalents (1,660) (59)
------ ---
Net increase (decrease) in cash and cash equivalents (5,488) 22,007
------ ------
Cash and cash equivalents
Beginning of the period 162,111 172,172
------- -------
End of the period $156,623 $194,179
======== ========
SOURCE MagnaChip Semiconductor Corporation
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